Time required to start a business is the number of calendar days needed to complete the procedures to legally operate a business. If a procedure can be speeded up at additional cost, the fastest procedure, independent of cost, is chosen.
DEFINITION: Time required to start a business is the number of calendar days needed to complete the procedures to legally operate a business. If a procedure can be speeded up at additional cost, the fastest procedure, independent of cost, is chosen.
These statistics are important but if your are a US citizen contemplating opening a business in a foreign country you will find that the most significant barrier is not the number of days it takes to fulfill the requirements for doing so in that country, but the barriers erected by the US tax legislation. Under the controlled foreign corporation provisions of the US tax code you must, in addition to complying with foreign law to establish and maintain your acounting records in local currency, you must also establish a parallel accounting system in US dollars by converting local currency values to dollars and constantly correcting this conversion as exchange rates vary. And also you must not only pay income taxes to the foreign country you must also pay income tax in US dollars to the IRS. Almost always the tax laws in foreign countries are so vastly different from US law that, with the currently depreciating value of the US dollar, you will discover, for example, that although the local currency books might show a loss, the US dollar books may well show a profit on which you are subject to US tax.
For the individual US entrepreneur who is contemplating moving abroad, for example, for the purpose of setting up a company to sell US exports in that country, you will discover that th massive additional accounting cost plus the double taxation imposed by the US in reality makes it extremely difficult, if not impossible, for the US citizen to establish and operate a business abroad. No other country in the world imposes this double taxation on its citizens who leave their home country to go abroad to sell home-country exports. This is the prime reason why the US is the only developed industrialized nation in the world with a massive foreign trade deficit. This barrier, erected by our own Congress, is much more of a barrier to US exports than those erected by foreign countries. If there was ever a wall that needs to be torn down to create American jobs manufacturing for export, this is it.
Diego Remus 3rd June 2010
For almost one year, there is a new law here in Brazil that allows you to instantly (I mean, with a click) start your own business in the "Individual Entrepreneur" category. It's a very simplified solution to formalize millions of people who do some economic activity but don't have Labor Law or conditions to open a small or micro business.
Share your thoughts, questions and commentary here
Want to know more? Search encyclopedia, statistics and forums: